Across the country, environmental organizations have made the transport and processing of crude oil from the tar sands of Alberta, Canada a focal point in their efforts to reduce carbon emissions, citing higher carbon emissions of oil from the tar sands (although that assertion is disputed). The proposed Keystone XL pipeline currently being reviewed by the State Department is perhaps the most visible example of this fight, with numerous environmental organizations lining up to oppose it (for example, the Sierra Club, the Natural Resources Defense Council, 350.org and others), with some advocating civil disobedience in their efforts to defeat the pipeline. (Slightly less high profile is the Northern Gateway pipeline – which would transport crude from Alberta through British Colombia to the west coast for overseas export – now opposed by the government of British Columbia.) While the Keystone XL debate may not directly impact Delaware, it appears the focus on tar sands crude, and the controversy that seems to follow it, has arrived in Delaware in what might otherwise have been considered an economic success story: PBF Energy’s Delaware City Refinery.
The Delaware City Refinery was shuttered in 2009, but after being purchased by PBF Energy in 2010 – reportedly after significant personal effort by Governor Jack Markell – the Refinery reopened bringing hundreds of jobs back to the state. According to PBF, the Delaware City Refinery is “one of the largest and most complex refineries on the East Coast” and employs more than 400 full time employees. (For comparison, the Delaware City and nearby Paulsboro, N.J. Refineries can process a combined total of 370,000 barrels per day; the Keystone XL pipeline would carry up to 830,000 barrels per day.) The Refinery, however, has encountered a laundry list of headlines in recent months, including a violation notice from the Department of Natural Resources and Environmental Control (DNREC) for unauthorized releases of 527,000 pounds of sulfur dioxide, complaints from nearby residents after a separate incident with the Refinery’s pollution control system “sent dark smoke billowing from a stack at the plant,” and disputes about the significantly expanded rail car delivery of crude oil, including tar sands crude, to the Refinery. The expansion of the Refinery’s rail yard in particular met with significant environmental opposition because of the use of Canadian tar sands crude to supply the Refinery, and the subsequent shipment by barge of such crude up the Delaware River to PBF’s nearby Paulsboro, New Jersey refinery.
The most recent disputes are over the facility’s air emissions permits. One permit process, for the Refinery's Title V permit, included the expected, if unexpectedly high, profile: Those in support, including a rally of hundreds of refinery workers and supporters before the public DNREC hearing; those in opposition, including an opposing rally by groups opposing the permit; and the DNREC hearing, moved into a larger venue to accommodate the unusually large crowd and reportedly attended by nearly 100 police officers. The issue is pending before DNREC. Following the roughly contemporaneous issuance of another permit (PDF), the Air Pollution Control permit for the Marine Vapor Recovery System at the Refinery, however, the Delaware Chapter of the Sierra Club and the Delaware Audubon Society filed challenges to DNREC’s permit with the state’s Environmental Appeals Board (PDF) and with the Coastal Zone Industrial Control Board (PDF) based in part on assertions that the permit violates Delaware’s Coastal Zone Act. (The Sierra Club and Audubon Society are represented by the Widener University Environmental Law Clinic, which is also representing the Sierra Club in a currently pending appeal (PDF at 2) to the Delaware Supreme Court of another decision relating to interpretation of the Coastal Zone Act.)
Delaware’s Coastal Zone Act (7 Del. C. sec. 7001, et. seq.) was signed into law in 1971 and, as its name suggests, prohibits certain land uses within a zone along Delaware’s coast. The Act, however, grandfathered in certain activities already occurring within the coastal zone. Of particular relevance to the Sierra Club’s and Audubon Society’s appeal is the Act’s prohibition on “offshore gas, liquid or solid bulk product transfer facilities” (except those grandfathered in as “nonconforming uses” already occurring in 1971). See 7. Del. C. sec. 7003. The appeal, in part, asserts that the Refinery’s expanded rail yard and barge shipment system is a bulk product transfer facility and therefore impermissible under the Coastal Zone Act. Alternatively, if the operation is otherwise a grandfathered nonconforming use, the appeal asserts that the crude oil transfer is nonetheless impermissible due to the expansion of the refinery’s footprint outside of the permissible grandfathered footprint established in 1971. The Coastal Zone Industrial Control Board has scheduled a public hearing on the appeal of the Marine Vapor Recovery System permit for July 16, 2013.
Adding a slight flavor of intrigue to the dispute is a recent report by the Wilmington News Journal that DNREC issued the permit despite warnings to DNREC from the Delaware Attorney General’s Office that the permit may violate the Coastal Zone Act. According to the News Journal’s report, “Gov. Jack Markell and top state environmental officials have apparently snubbed and suppressed a warning from state attorneys about possible regulatory violations at the Delaware City Refinery, opting instead to seek outside legal guidance on contested changes at the 210,000 barrel per day plant.” The News Journal, citing unnamed state officials, reported that the Attorney General’s Office had provided DNREC with a memorandum providing a “detailed list of the refinery’s potential Coastal Zone Act conflicts,” apparently including the refinery’s expanded rail yard and the barge shipments to PBF's Paulsboro Refinery.
Regardless of the News Journal’s report, however, the dispute serves as a reminder of the nationwide stage on which the climate change debate, and by proxy the fight over Canadian tar sands crude, is now fought.

McCARTER & ENGLISH CLIMATE CHANGE AND RENEWABLE ENERGY PRACTICE GROUP

The business case for the development of renewable energy projects, from biodiesel and ethanol to wind, solar, and distributed generation, is more compelling than ever as tax and regulatory incentives combine to attract investments. Emerging issues in environmental law and increasingly recognized principles of corporate social responsibility are encouraging public companies to voluntarily reduce greenhouse gas emissions, install clean energy alternatives, and invest overseas in projects under the Kyoto Protocol to respond to climate change concerns.